Commercial lounges, expanding shared-office firms and increasing investments show sector recovering from setbacks 

The sharing economy sector in China has just received a shot in the arm, in the form of a new, and rapidly growing, business segment－study lounges.
Out with distractions at coffee shops or quick service restaurants, the traditional go-to destinations of the studious scholars. No more the fear of drifting off to sleep while staring at the books.

High school and university students in urban China, starved of quiet spaces conducive to study, are beginning to realize the business of study rooms, which facilitates immersive learning experiences, is a blessing indeed.

The trend started in neighboring Japan and South Korea several years ago. Last summer, it spread to big Chinese cities, including Beijing and Shanghai. Now, it is becoming entrenched.

Zizai Study Room is a classic example of the popular commercial study lounges that have sprouted all over Beijing. Spread over 150 square meters, the shared space aims to provide a productive study environment to its users. In addition, users get access to shared resources such as Wi-Fi, coffee, refreshments and more.

They can access the space from 9 am to 10:30 pm seven days a week. In this respect alone, a commercial study lounge is not very different from plain-vanilla self-study rooms that some colleges provide.

But, commercial study lounges charge a fee for their services. The average entry fee is around 3 yuan ($0.4) to 6 yuan per hour. Users can buy a wide range of packages, such as a daily pass, weekly pass, or monthly pass, depending on their individual needs. Zizai claims it already has hundreds of paid members.

Nor Hargana, 29, is a Zizai regular. "I've been studying here for the postgraduate admission test since last September. Usually, I'm in the study room more than ten hours a day, five days a week.

"Compared to the self-study rooms on the campus and the public libraries, the shared study space offers a comfortable environment for me to dedicate myself to study. It's quieter and not that crowded. Although I've finished the test, I still come here to study or read books."

Zhang Yuting, founder of Zizai, said most of the users are from the younger generation, in their 20s and 30s. "With the rise of millennials in the work force, there's a growing need for practical skills, knowledge, content, and a better study space. For a long time, the young generation could not find such a place, which created this business opportunity.

"Currently, we can take in 40 customers at a shared study lounge. Daily occupancy rates hover around 80 percent."

Huge initial investment and high rents could mean commercial study room business will likely take a long time to turn profitable, she said. "With an increasing number of startups eyeing to carve out a stake in the emerging market, the competition is getting fiercer now. Instead of expanding our business rapidly, we will focus on offering better services and experiences, and will continue to offer culturerelated classes to attract more users."

When Zhang launched Zizai in July 2019, there were only about 10 study lounges in Beijing. Now, their number has unexpectedly surged to more than 70.

Raymond Wang, partner of consultancy Roland Berger, said shared study room is an entrepreneurial solution to the problem of seat-hogging, especially during the exam seasons.

"The shared study spaces function much like co-working spaces, but are targeted at the student budget," Wang noted. "Today, the young generation has a growing need for knowledge and practical skills to improve themselves.

However, some may find it difficult to find a peaceful place to study, and many of them might be faced with noisy environment at home, or hardly find a seat at cafes or selfstudy rooms on their campus. Against this background, shared study spaces have sprung up to solve such a major pain-point faced by those groups in China."

Such commercial study lounges need to put in more efforts to secure their future business, Wang said. "Location is the key to a shared study space, which means a particular space can only serve a certain group of people nearby. Currently, it's hard to estimate the market size and profit margins.
"First, entrepreneurs need to find better ways to attract more clients.

Second, they need to diversify the offerings and provide more valueadded services. Third, they need to balance the peak and down times."

Shared study space is just one of a bunch of new services that have popped up in recent years in the sharing economy sector in China.

So far, the sector has been known for its shared bicycles, short-term accommodation, car rides, everyday clothing, portable power banks, and even umbrellas. Ever-evolving mobile internet technologies and the government's supportive policies helped the sector to grow rapidly in recent years.

In the beginning, sharing economy involved consumer-to-consumer, or C2C, exchange of underutilized products or services. But soon, the sector snowballed, covering a wide range of products and services, overtaking the scene overseas.

The sector is now even helping transform traditional businesses, persuading them to operate in a more innovative and efficient way, said experts and entrepreneurs.

Wang of Roland Berger said he is bullish on the sector's prospects as the focus is now shifting from rapid expansion to a new stage wherein great importance will be attached to the real market needs and professional management.

He said China's bike-sharing business proved to be a bubble for some players, and brought about a shakeout, consolidation and rationalization in the market during the past three years.

Once deemed a symbol of China's rapidly growing sharing economy, the cash-strapped bike-sharing platform Ofo Inc has been struggling financially in the past few years.

By the end of 2018, the Beijingbased bike-sharing pioneer had received more than 10 million online applications for deposit refunds, as the firm faced accusations of stalling on refunds. Till now, it reportedly still owes more than 10 million applicants over 1 billion yuan in refunds.

Chen Yinjiang, deputy secretarygeneral of the China Consumer Protection Law Society, said companies should learn a lesson from Ofo's crisis.

"Those participating in the sharing economy should focus on improving convenience through technological means," Chen said. "Companies should abide by the normal laws of enterprises development with a main purpose to improve product quality and offer better services, rather than doing things to undermine their creditworthiness.

"Sharing economy has become a key driving force to boost China's economic development, and the sharing model have activated idle resources in the society. Companies should take on their social responsibility and implement effective measures to protect the rights of consumers. And the authorities also need to guide the companies, leading to a healthy and sustainable growth path."

According to a report released by the State Information Center, the sharing economy generated 2.94 trillion yuan in total transaction volume in 2018, up 41.6 percent yearon-year.

The report noted the country's sharing economy is on the cusp of a new phase of development where quality matters more than quantity or market expansion and speed of expansion. Its annual growth rate is estimated to reach 30 percent in the next three years, slower but signaling its sustainable development.

China has emerged as a global pioneer in the sharing economy, with a wide range of businesses using the peer-to-peer, or P2P, model, the report added.
By the end of 2018, there were 305 unicorns, or startups valued at more than $1 billion, in the world, of which 83 were Chinese companies. And 34 of them were in the sharing economy sector, accounting for 41 percent of Chinese unicorns.

Seeing the huge growth potential, a growing number of companies both at home and aboard are actively embracing the sharing model, which not only brings convenience but also injects new impetus into the regional economic development.

For instance, WeWork, a co-working space and space-as-a-service platform provider, is gearing up to expand in China, seeking to gain an edge in the country's blossoming sharing economy market.

Earlier this month, WeWork announced the opening of a brandnew facility in Nanjing in Jiangsu province. This marked the company's debut in the city, and could shape its strategy in the Yangtze Delta region.

Ai Tiecheng, general manager of WeWork Greater China, said the new move demonstrated the company's continuous localization strategy.

"In the future, WeWork will spare no effort in attracting entrepreneurs and service members by leveraging on our experience in co-working space to help Nanjing's Jianye District to become a digital economy center with integrated financial and technological development.

"We aim to help Hexi Central Business District to become a regional cluster in eastern China for modern services, including financial, headquarters, events and exhibitions, culture and sports, and commerce and trade so as to accelerate innovation development in Nanjing, ignite new engines of growth and help the city to be a strategic support point and hub for integrated development of the Yangtze Delta region."

Shen Jianrong, Party secretary of Jianye District, said WeWork will have a positive impact on Jianye District as it helps build an outstanding innovation ecosystem.

"Its global community resources and leading office space technology enable it to attract foreign and local talents as well as startups, giving them endless opportunity for networking and businesses. This will in turn help unleash the society's capacity for innovation and entrepreneurship, giving the city center a unique flavor of innovation."

Agreed Chen Zhe, director of cloud strategic development division for Alibaba.

"At WeWork community, we have experienced the life-style of an innovative work model. An open co-working space can not only improve employees' work efficiency but also foster conversion of an entrepreneurial team's innovation.

"With the help of WeWork's global community network, we have had the opportunity to meet quality members from different industries and explore business opportunities with them."

Jiang Qiping, secretary-general of the Information Research Center at the Chinese Academy of Social Sciences said: "To foster the long-term development of sharing economy, the key is to strengthen governance over the platforms and create a better environment. Governments, shared platforms and consumers should work together to create a supervising and managing system."